Norway’s Petroleum Directorate reported yesterday that the company had drilled 56 exploration wells in 2008, of which 25 resulted in new discoveries. That’s the good news. The not-so-good news is that the new discoveries barely covered 2008 production, so there was no appreciable gain in reserves. The country invested about $18 billion in its oil industry during the year.
Norway set a goal of increasing its reserves by five billion barrels ofoil between 2005 and 2015. To date, it has managed an increase of justunder 1.5 billion barrels.
The conclusion: "This indicates that achieving this goal could presenta challenge. 2008 was a year marked by a global economic downturn thatalso led to a dramatic drop in oil prices. This situation has alsocreated uncertainty as regards the cost level and planned investmentsin new projects on the Norwegian shelf."
Declines in North Sea production are not news. But if Norway, which isprobably the premier manager of national oil resources, is worriedabout its oil business, other North Sea producers ought to payattention.
January 8, 2009